Does Anyone Know the True Cost of EV Batteries? (Not Really)

If you want to start an argument about electric vehicles (EVs), the best way to do it is to mention battery cost.

The problem is, there's no single price for electric car batteries. You can't look it up on the Web or point your finger at a number in a catalogue. And that, of course, leaves the door open for some lively arguments.

Two weeks ago, three industry experts told us that they estimate today's production EV battery costs to be between $800 and $1,000/kWh. When we printed those numbers, EV enthusiasts and backyard EV converters were quick to respond. "Lithium batteries today cost around $1 per Ah, so a 24 kWh pack like the Leaf equals approximately $7K if you buy cells as a private person," wrote one commenter on a Design News blog last week. Assuming that the commenter was talking about a typical 3.5V EV battery, it would mean that the cost falls in the neighborhood of $285/kWh.

So here we have one group estimating today's battery pack prices at $800 to $1,000/kWh, while another says, quite correctly, that EV cells are already available for $285/kWh.

"There's a reason why there's such a big spread," David Swan, founder of DHS Engineering, designer of the batteries for the 245mph White Lightning electric vehicle, and owner of three electric cars, told Design News. "It's the difference between cells, battery packs, and the costs over vehicle life -- things like warranties, profit, and return on development investment."

There's also another issue: The cost figures in today's electric vehicles aren't based on $1/Ah, off-the-shelf, lithium cells from China. Automakers typically contact suppliers, qualify their products, and form partnerships. Then they work with their partners to tweak battery chemistries to their specs. They balance power and energy. They test for quality and long-term reliability. This can take years, so the cell they use is in a different stage of development than the one that's now available publicly. In other words: It's better, it's custom-engineered, and the price is different.

As Swan points out, however, the biggest disparity arises from the cost of cells versus the cost of an entire battery pack. Battery packs in production cars are different from those in backyard EV conversions. Automakers assemble their EV battery cells in a box with crash integrity. They also design elaborate cooling systems. The Chevy Volt employs a fluid coolant that circulates through 1mm-thick channels machined into 144 metal plates.

Correct me if I am w2rong but the real heart of the problem with EV is all about the batteries and the controls. The rest of the car is pretty much the same so the Energy storage aspects are the real issue.

Electric motors will get some refinements notably in terms of the electric wheel and traction and braking controls built in to the system. some other issues with weight and materials come into play as well but for the most part these are the same regardless of the power plant for the car. But the real issues are related to the battery and the control systems.

And what we see being discussed is a technology and manufacturing issue, cost. What will it take to bring down the cost, no matter what it really is now it is too high. Large scale manufacturing and solid demand will reduce costs. Improved battery chemistry and manufacturing of the cells will bring down costs. The control systems once they are commoditized and in good demand will bring down costs.

As demand ramps up for the energy storage and control systems we can expect this to drive down costs. So expanding the applications for these kinds of distributed power storage units will improve demand.

Taking advantage of "time of use" rates for electricity in commercial buildings and residential applications might help drive demand. Right now, the ROI is insufficient to justify the investment. Imagine if it became very very attractive to invest in a battery storage system for your home and this could be carried over to the EV space.

I see increasing demand as one of the best ways to drive down costs. Am I wrong?

TJ: When we last checked, replacement battery costs for the Volt and Leaf were still unavailable. The old Prius battery, which used a nickel-metal hydride chemistry and was rated around 1.5 kWh, cost about $2,500. It's worth mentioning, however, that in 2008, Bob Lutz of GM suggested that the Volt's initial price factors in the cost of battery replacement, which again makes it difficult to figure out what these packs actually cost.

From what you've said, replacing the power storage system in a car would mean replacing the pack, not the cells. It comes out as a unit, goes in as a unit. So is there pricing from third-party suppliers of the battery packs yet to prove the $1000 range?

The bottom line is that I believe the experts who say EV batteries are running $800 - $1,000/kWh. Batteries are more than cells and the costs mount up. Sure, no one can say EXACTLY what they cost is. But the 20 or so experts that I depend on have been around the business a long time. They put their names and their companies' names on their estimates. They're not sitting in front of their computers late at night and typing anonymous thoughts under the guise of pseudonyms. And they're not part of a conspiracy that's trying to undermine the electric car market. When Toyota says that the battery costs $500 per additional mile, you can believe it must be expensive.

Chuck, just following the numbers is enough to make one's head spin. So what's the bottom line here in terms of the argument? A feeling that automakers are using higher numbers to justify higher prices on EVs, while the other side argues that the battery costs aren't that high, thus shouldn't justify higher vehicle costs?

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